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Big Shake-Up in India’s GST: What You Need to Know

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From 22 September 2025, the government reworked India’s GST system to simplify things, cut tax burdens on essentials, and adjust rates for non-essentials. Here’s how the new structure works, which goods & services are affected, and what it means for consumers.


🔍 What’s Changed: GST Overhaul

  • The old four tax slabs (5%, 12%, 18%, 28%) have been rationalised. Under the new regime there are effectively three main categories:
    1. Zero (0%) — items that are now exempt
    2. 5% — essentials and many daily-use goods
    3. 18% — most other goods & services
    4. Plus a 40% “luxury/sin” slab for high-end or harmful goods.
  • Aim: reduce cost of living for everyday consumers; reduce complexity; pass benefits broadly.

💰 What’s Cheaper Now

Many items frequently used in households will cost less due to lower GST. Here are some key categories and examples:

CategoryExamples of Items Now Cheaper / Exempt
Zero (0%) GSTMany school supplies (exercise books, pencils, erasers, crayons), certain bread, milk & milk-derivatives; some basic foods and essential staples.
5% slabPersonal-care & hygiene items like soap, shampoo, toothpaste, hair oil; packaged foods / snacks; dairy spreads & butter & ghee; medical devices / diagnostic kits; certain baby & feeding items; many household goods.
18% slab reductionsElectronics/appliances that were taxed at 28% earlier (like TVs, air conditioners, washers, etc.); small cars/cars with smaller engine capacity; two-wheelers below a certain engine size; many more consumer goods.

So everyday essentials see the biggest relief.


⚠️ What’s More Expensive / Higher Slab

Some things have been shifted up or placed intentionally in higher tax to reflect luxury status, or because of “sin” / non-essential nature. Examples include:

  • Tobacco, cigarettes, pan masala; items seen as “sin goods”.
  • Luxury vehicles / high engine capacity cars.
  • Goods with luxury / premium positioning.

These now attract the 40% rate.


📊 What This Means for You

  • Cost of essentials goes down — groceries, hygiene, medicine, school supplies are cheaper. Good news for middle & lower income households.
  • Goods you buy occasionally, especially luxury ones, may still be expensive. If your purchase falls in 40%, you’ll pay more.
  • Appliances, electronics & vehicles in certain segments will see noticeable price reductions.
  • Insurance & financial products: some individual life & health insurance policies are now exempt from GST (i.e people don’t have to pay GST on them).
  • Business side & compliance: simpler structure means fewer slabs to track; trade & manufacture of items now reclassified under new rates will need to adjust pricing, stock-management, accounting.

💭 Take-aways

  • This change is a relief for many everyday consumers — cheaper daily goods.
  • For big ticket or luxury spending, costs may remain steep or get steeper.
  • It’ll be interesting to watch how retailers, manufacturers, and brands pass on the savings; how prices adjust in real-on-ground shops.
  • Also worth seeing if this helps control inflation, boost demand, especially during festivals etc.

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